Media Institute Opposes RIAA Performance Tax February 9, 2010

A proposed compulsory-license scheme that would force radio broadcasters to pay royalties to musical artists and record labels would impose an undue economic burden on broadcasters already racked by the recession. In addition, the plan would likely reduce broadcast radio diversity, especially among small and minority-owned stations. Those are the conclusions of a new Policy Views issue paper released by The Media Institute.

The paper notes that radio broadcasters and record labels have enjoyed a “mutually beneficial economic relationship” in which broadcasters play recordings available for free, thereby building audiences and ad revenue, while record labels get the benefit of that free airplay to boost record sales. One study puts the promotional value of broadcast radio airplay at $1.5 billion to $2.4 billion annually.

Imposing a royalty scheme on broadcasters would not only upset this equilibrium, but would likely force a significant number of stations into bankruptcy or off the air altogether. Black and Hispanic stations, many of which already struggle for ad revenue and financing, would bear the brunt of compulsory “performance fees” for sound recordings.

The loss of such stations would be particularly acute for Black and Hispanic communities where local radio stations are “a primary venue for the expression of minority and ethnic viewpoints,” the paper states.

“Performance Fees on Radio Stations: A Debacle Waiting To Happen” was written by Richard T. Kaplar, vice president of The Media Institute. The Policy Views paper is available on the Institute’s website at www.mediainstitute.org, and is also available in hard copy.